Union Bank v. Conroy 42 A.D. 576

42 A.D. 576

Union Bank, Buffalo, N. Y., Respondent, v. Charles C. Conroy, Defendant, Impleaded with Rock H. Parsons, Appellant.

Subrogation — notes upon which the three makers are equally liable secured .by a mortgage given by one of them which is sought to be foreclosed — right of one holding a subsequent lien on the mortgaged premises to subrogation — pan'ty.

Where a bank, holding a mortgage made by Charles C. Conroy and notes made by Charles C. Conroy, B. T. Johnson and W. H. Johnson, on which all the makers are equally liable, as security for the same debt, elects to foreclose the • mortgage, a judgment creditor of Charles C. Conroy and W. H. Johnson, whose judgment is a subsequent lien upon the mortgaged premises, is entitled *577to be subrogated to the bank’s right of action upon the notes, in order to enable him to enforce Conroy’s right of contribution against E. T. Johnson.

The presence of E. T. Johnson as a party to the foreclosure action is not necessary to enable the judgment creditor to obtain in that action a judgment subrogating such creditor to the bank’s right of action upon the notes.

Appeal by the defendant, Rock H. Parsons, from an order of the Supreme Court, made at the Erie Special Term and entered in the office of the clerk of the county of Erie on the 11th day of November, 189-8, setting aside his answer as frivolous and directing judgment of foreclosure.

This action was brought to foreclose two mortgages held by the plaintiff upon certain real estate, one of which was given to it by the defendant Charles C. Conroy to secure the payment of all sums of money in which the latter then was, or at any time thereafter might become, indebted to the plaintiff, and for any and all promissory notes, checks, drafts and bills upon which the said Conroy might be in any manner liable, as maker, indorser, acceptor or otherwise, and any renewals of the same, and any indebtedness of any name.and nature, then or thereafter owing by him to the plaintiff. The complaint sets up various notes made and delivered to the plaintiff, payable to its cashier by Charles C. Conroy, E. T. Johnson and W. H. Johnson, on which it was alleged that Charles C. Conroy was liable.

Oharles B. Wheeler, for the appellant.

August Beelter, for the respondent.

Nash, J.:

The bank holds Conroy’s mortgage and the notes of Conroy, E, T. Johnson and W. H. Johnson as security for the same debt. The defendant Parsons has a judgment against Conroy, W. H. Johnson and Henry J. Wilkes, which is a subsequent lien upon the mortgaged pre mises as security for his debt. He alleges in his answer that' as between Conroy, W. H. Johnson and E. T. Johnson, the makers of the notes held by the bank, they are under obligations to discharge an equal proportion of their indebtedness upon the notes. The bank is in the position of a creditor having two funds to which it may resort for payment and elects to foreclose its mortgage. The case *578is, therefore, within the rule as stated by Judge Rédfield in his notes to Story’s Equity Jurisprudence (10th ed. vol. I, 629): “ Wherever a creditor by his election to take one of two funds, to which alone another creditor has the right to resort, deprives the latter of his claim to that fund, he will be permitted in equity to stand in the place of that creditor in regard to the other fund.”

If the bank had brought an action upon the notes and thereby satisfied the debt, it would have released its mortgage lien, prior to Parsons’ judgment, to that extent. If the defendant Parsons is subrogated in accordance with the prayer of his answer, and by the foreclosure the notes are paid, Parsons, as the equitable assignee of the bank, can recover of E. T. Johnson the amount of his liability to Conroy, otherwise Parsons loses the lien of his judgment; and as there is no privity of contract between Parsons and Johnson, the former is remediless as against the latter; the right of Parsons to proceed against E. T. Johnson can only be acquired by subrogation. The promissory notes in case of the subrogation of Parsons, as proposed, will not be extinguished by the satisfaction of the debt to the bank. (Hubbell v. Blakeslee, 71 N. Y. 63.)

The presence of E. T. Johnson as. a party to this action is not required. His rights will not be affected by the judgment or the transfer of the notes to Parsons. The latter takes the notes simply to enforce Conroy’s right .to contribution as against E. T.- Johnson.

In this manner justice may be; done to all parties; the bank will not be delayed in the foreclosure :of its mortgage ; the indebtedness of Conroy and the Johnsons to the bank may be paid ; E. T. Johnson will pay his indebtedness to Conroy, and the amount of the latter will be applied upon Parsons’ judgment against Conroy.

The order should be reversed, with ten dollars costs and disbursements, and the motion denied, with ten dollars costs.

All concurred, Spring, J., not sitting.

Order reversed, with, ten dollars costs and disbursements, and motion denied, with ten'dollars costs.

Union Bank v. Conroy
42 A.D. 576

Case Details

Name
Union Bank v. Conroy
Decision Date
Jul 1, 1899
Citations

42 A.D. 576

Jurisdiction
New York
Court
New York Supreme Court, Appellate Division

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